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John Hancock
INSTITUTIONAL FUNDS
[LOGO] Prospectus
January 10, 2000
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As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these funds or determined whether the information in
this prospectus is adequate and accurate. Anyone who indicates otherwise is
committing a federal crime.
Active Bond Fund
Dividend Performers Fund
Medium Capitalization Growth Fund
formerly Multi-Sector Growth Fund
Small Capitalization Value Fund
Small Capitalization Growth Fund
International Equity Fund
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue, Boston, Massachusetts 02199-7603
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Contents
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A fund-by-fund summary of Active Bond Fund 4
goals, strategies, risks,
performance and expenses. Dividend Performers Fund 6
Medium Capitalization Growth Fund 8
Small Capitalization Value Fund 10
Small Capitalization Growth Fund 12
International Equity Fund 14
Policies and instructions Your account
for opening, maintaining
and closing an account in Who can buy shares 16
any institutional fund. Opening an account 16
Buying shares 17
Selling shares 18
Transaction policies 20
Dividends and account policies 20
Business structure 21
Further information on Financial highlights 22
the institutional funds.
For more information back cover
<PAGE>
Overview
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JOHN HANCOCK INSTITUTIONAL FUNDS
These funds offer clearly defined investment strategies, each focusing on a
particular market segment and following a disciplined investment process.
Blended together or selected individually, these funds are designed to meet the
needs of institutional investors, including 401(k) plan participants, seeking
risk-managed investment strategies from seasoned professional portfolio
managers.
RISKS OF MUTUAL FUNDS
Mutual funds are not bank deposits and are not insured or endorsed by any bank,
government agency or the Federal Deposit Insurance Corporation. Because you
could lose money by investing in these funds, be sure to read all risk
disclosure carefully before investing.
THE MANAGEMENT FIRM
All John Hancock institutional funds are managed by John Hancock Advisers, Inc.
Founded in 1968, John Hancock Advisers is a wholly owned subsidiary of John
Hancock Mutual Life Insurance Company and manages more than $30 billion in
assets.
FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:
[Clip Art] Goal and strategy The fund's particular investment goals and the
strategies it intends to use in pursuing those goals.
[Clip Art] Main risks The major risk factors associated with the fund.
[Clip Art] Past performance The fund's total return, measured year-by-year and
over time.
[Clip Art] Your expenses The overall costs borne by an investor in the fund,
including annual expenses.
3
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Active Bond Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks a high rate of total return consistent with prudent
investment risk. To pursue this goal, the fund normally invests 80% of assets in
a diversified portfolio of investment-grade debt securities. These include
corporate bonds and debentures as well as U.S. government and agency securities.
Most of these securities are investment-grade, although the fund may invest up
to 20% of assets in junk bonds rated as low as CC/Ca and their unrated
equivalents. There is no limit on the fund's average maturity.
In managing the fund's portfolio, the managers concentrate on sector allocation,
industry allocation and securities selection: deciding which types of bonds and
industries to emphasize at a given time, and then which individual bonds to buy.
When making sector and industry allocations, the managers try to anticipate
shifts in the business cycle, using top-down analysis to determine which sectors
and industries may benefit over the next 12 months.
In choosing individual securities, the managers use bottom-up research to find
securities that appear comparatively undervalued. The managers look at bonds of
all different quality levels and maturities from many different issuers,
potentially including U.S. dollar denominated securities of foreign governments
and corporations.
The fund uses a disciplined, risk-controlled approach to fixed income
management. The fund may use certain derivatives (investments whose value is
based on indices, securities or currencies), especially in managing its exposure
to interest rate risk, although it does not intend to use them extensively. The
fund intends to keep its exposure to interest rate movements generally in line
with that of the markets in which it invests.
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in investment-grade
short-term securities. In these and other cases, the fund might not achieve its
goal.
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PORTFOLIO MANAGERS
James K. Ho, CFA
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Executive vice president of adviser
Joined team in 1995
Joined adviser in 1985
Began career in 1977
Anthony A. Goodchild
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Senior vice president of adviser
Joined team in 1998
Joined adviser in 1994
Began career in 1968
Benjamin Matthews
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Vice president of adviser
Joined team in 1995
Joined adviser in 1995
Began career in 1970
Triet Nguyen
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Vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1980
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. All figures assume dividend reinvestment. Past performance
does not indicate future results.
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Year-by-year total returns -- calendar years
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1996 1997 1998
4.78% 10.39% 8.97%
1999 total return as of March 31: -0.22%
Best quarter: Q3 '98, 4.09% Worst quarter: Q1 '96, -0.93%
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Average annual total returns -- for periods ending 12/31/98
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Fund Index
1 year 8.97% 9.47%
Life of fund - began 3/30/95 8.78% 9.43%
Index: Lehman Brothers Government/Corporate Bond Index, an unmanaged index of
U.S. government, U.S. corporate and Yankee bonds.
4
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MAIN RISKS
[Clip Art] The major factors that influence this fund's performance are interest
rates and credit risk. When interest rates rise, bond prices generally fall. An
increase in the fund's average maturity will normally increase its sensitivity
to changes in interest rates.
The fund could lose money if the credit ratings of any bonds it owns are
downgraded or the issuers default. In general, lower-rated bonds have higher
credit risks. If certain sectors or investments do not perform as the fund
expects, it could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Junk bonds and foreign securities may make the fund more sensitive to
market or economic shifts in the U.S. and abroad.
o If interest rate movements cause the fund's mortgage-related and callable
securities to be paid off substantially earlier or later than expected,
the fund's share price or yield could be hurt.
o In a rising interest rate environment, higher-risk securities and
derivatives could become harder to value or to sell at a fair price.
o Certain derivatives could produce disproportionate losses.
o Foreign securities may make the fund more sensitive to market or economic
shifts in the U.S. and abroad.
Any U.S. government guarantees on individual securities in the portfolio do not
apply to these securities' market value or current yield, or to fund shares.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
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YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
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Annual operating expenses
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Management fee 0.50%
Other expenses 1.83%
Total fund operating expenses 2.33%
Expense reimbursement (at least until 7/1/00) 1.73%
Net annual operating expenses 0.60%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
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Expenses Year 1 Year 3 Year 5 Year 10
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$61 $561 $1,088 $2,532
FUND CODES
- -----------------------------
Ticker JHABX
CUSIP 410132203
Newspaper ActiveBd
JH fund number 421
5
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Dividend Performers Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital with income as a secondary
objective. To pursue this goal, the fund normally invests at least 80% of assets
in a diversified portfolio of U.S. stocks with market capitalizations within the
range of the Standard & Poor's 500 Stock Index. On June 1, 1999, that range was
$334.7 million to $410.8 billion.
The managers normally invest at least 65% of assets in "dividend performers."
These are companies that have typically increased their dividend payments
steadily for ten years.
The managers use fundamental financial analysis to identify individual companies
with high-quality income statements, substantial cash reserves and identifiable
catalysts for growth, which may be new products or benefits from industry-wide
growth. The managers generally visit companies to evaluate the strength and
consistency of their management strategy. Finally, the managers look for stocks
that are reasonably priced relative to their earnings and industry.
Historically, companies that meet these criteria have tended to have large or
medium market capitalizations.
The fund may not invest more than 5% of assets in any one security. The fund
typically invests in U.S. companies, but may invest in American Depositary
Receipts. It may also make limited use of certain derivatives (investments whose
value is based on indices).
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in U.S. government
securities with maturities of up to three years, and may invest more than 10% of
assets in cash or cash equivalents. In these and other cases, the fund might not
achieve its goal.
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PORTFOLIO MANAGERS
John F. Snyder, III
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Executive vice president of adviser
Joined team in 1995
Joined adviser in 1991
Began career in 1971
Peter M. Schofield, CFA
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Vice president of adviser
Joined team in 1996
Joined adviser in 1996
Began career in 1984
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. All figures assume dividend reinvestment. Past performance
does not indicate future results.
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Year-by-year total returns -- calendar years
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1996 1997 1998
18.56% 34.33% 17.96%
1999 total return as of March 31: 0.21%
Best quarter: Q4 '98, 20.75% Worst quarter: Q3 '98, -11.45%
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Average annual total returns -- for periods ending 12/31/98
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Fund Index
1 year 17.96% 28.58%
Life of fund - began 3/30/95 23.70% 29.27%
Index: Standard & Poor's 500 Stock Index, an unmanaged index of 500 stocks.
6
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MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to
movements in the stock market.
The fund's investment strategy will influence performance significantly.
Large-capitalization stocks could fall out of favor, causing the fund to
underperform funds that focus on small- or medium-capitalization stocks.
Similarly, if individual securities do not perform as the investment team
expects, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Certain derivatives could produce disproportionate losses.
o Foreign investments carry additional risks, including inadequate or
inaccurate financial information and social or political upheavals.
o In a down market, higher-risk securities and derivatives could become
harder to value or to sell at a fair price.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
================================================================================
YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
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Annual operating expenses
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Management fee 0.60%
Other expenses 0.35%
Total fund operating expenses 0.95%
Expense reimbursement (at least until 7/1/00) 0.25%
Net annual operating expenses 0.70%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
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Expenses Year 1 Year 3 Year 5 Year 10
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$72 $278 $501 $1,144
FUND CODES
- ------------------------------
Ticker JHDPX
CUSIP 410132104
Newspaper DivPerf
JH fund number 442
7
<PAGE>
Medium Capitalization Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term capital appreciation. To pursue this goal,
the fund normally invests at least 80% of assets in stocks of medium
capitalization companies -- companies in the capitalization range of the Russell
Midcap Growth Index. On June 1, 1999, that range was $190 million to $42.9
billion.
In managing the portfolio, the manager seeks to identify promising sectors for
investment. The manager considers broad economic trends, demographic factors,
technological changes, consolidation trends and legislative initiatives.
In choosing individual securities, the manager conducts fundamental financial
analysis to identify companies that appear able to sustain 15% annual earnings
growth for the next three to five years. The manager looks for companies with
growth stemming from a combination of gains in market share and increasing
operating efficiency. Before investing, the manager identifies a specific
catalyst for growth, such as a new product, business reorganization or merger.
The management team generally maintains personal contact with the senior
management of the companies the fund invests in.
The fund may invest up to 10% of assets in foreign securities. It may also use
certain derivatives (investments whose value is based on indices or currencies).
The fund may not invest more than 5% of assets in any one security.
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in U.S. government
securities with maturities of up to three years, and may invest more than 10% of
assets in cash or cash equivalents. In these and other cases, the fund might not
achieve its goal.
================================================================================
PORTFOLIO MANAGER
Barbara C. Friedman, CFA
- ----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1973
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. All figures assume dividend reinvestment. Past performance
does not indicate future results.
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Year-by-year total returns -- calendar years
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1996 1997 1998
31.55% 3.61% 7.35%
1999 total return as of March 31: 1.03%
Best quarter: Q4 '98, 22.46% Worst quarter: Q3 '98, -20.97%
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Average annual total returns -- for periods ending 12/31/98
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Fund Index
1 year 7.35% 17.86%
Life of fund - began 4/11/95 16.53% 21.11%*
Index: Russell Midcap Growth Index, an unmanaged index containing those stocks
from the Russell Midcap Index with a greater-than-average growth orientation.
* Index figures as of 3/31/95.
8
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to
movements in the stock market.
Stocks of medium-capitalization companies may be more volatile than those of
larger companies. Similarly, medium-capitalization stocks are generally traded
in lower volumes than large-capitalization stocks.
The fund's investment strategy will influence performance significantly.
Medium-capitalization stocks could fall out of favor, causing the fund to
underperform funds that focus on other types of stocks. Also, growth stocks as a
group could fall out of favor with the market, causing the fund to underperform
funds that focus on value stocks. Similarly, if industries or individual
securities do not perform as the team expects, the fund could underperform its
peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, higher-risk securities and derivatives could become
harder to value or to sell at a fair price.
o Certain derivatives could produce disproportionate losses.
o Foreign investments carry additional risks, including potentially
unfavorable currency exchange rates, inadequate or inaccurate financial
information and social or political upheavals.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
================================================================================
YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
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Annual operating expenses
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Management fee 0.80%
Other expenses 0.31%
Total fund operating expenses 1.11%
Expense reimbursement (at least until 7/1/00) 0.21%
Net annual operating expenses 0.90%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
$92 $332 $591 $1,333
FUND CODES
- ------------------------------
Ticker HMSGX
CUSIP 410132401
Newspaper MdCapGr
JH fund number 439
9
<PAGE>
Small Capitalization Value Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks capital appreciation. To pursue this goal, the fund
normally invests at least 80% of assets in stocks of small-capitalization
companies -- companies in the capitalization range of the Russell 2000 Index. On
June 1, 1999, that range was $8.7 million to $10.3 billion.
In managing the portfolio, the managers emphasize a value-oriented approach to
individual stock selection. With the aid of proprietary financial models, the
management team looks for companies that are selling at what appear to be
substantial discounts to their long-term value. These companies often have
identifiable catalysts for growth, such as new products, business
reorganizations or mergers.
The managers use fundamental financial analysis of individual companies to
identify those with substantial cash flows, reliable revenue streams and strong
competitive positions. The strength of companies' management teams is also a key
selection factor. The fund diversifies across industry sectors. The fund may not
invest more than 5% of assets in any one security.
The fund invests primarily in stocks of U.S. companies, but may invest up to 15%
of assets in a basket of foreign securities and bonds rated as low as CC/Ca and
their unrated equivalents. (Bonds rated below BBB/Baa are considered junk
bonds.)
The fund may make limited use of certain derivatives (investments whose value is
based on indices or currencies).
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in investment-grade
short-term securities. In these and other cases, the fund might not achieve its
goal.
================================================================================
PORTFOLIO MANAGERS
Timothy E. Keefe, CFA
- ----------------------------------
Senior vice president of adviser
Joined team in 1996
Joined adviser in 1996
Began career in 1987
Timothy E. Quinlisk, CFA
- ----------------------------------
Vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1985
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with broad-based market
indices for reference). This information may help provide an indication of the
fund's risks. All figures assume dividend reinvestment. Past performance does
not indicate future results.
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Year-by-year total returns -- calendar years
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1996 1997 1998
15.60% 29.12% 0.30%
1999 total return as of March 31: 3.71%
Best quarter: Q4 '98, 24.05% Worst quarter: Q3 '98, -22.62%
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Average annual total returns -- for periods ending 12/31/98
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Fund Index 1 Index 2
1 year 0.30% -2.55% -6.45%
Life of fund - began 4/19/95 13.31% 15.23% 16.97%
Index 1: Russell 2000 Index, an unmanaged index of 2,000 U.S.
small-capitalization stocks.
Index 2: Russell 2000 Value Index, an unmanaged index containing those stocks
from the Russell 2000 Index with a value orientation.
10
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to
movements in the stock market. Because the fund concentrates on
small-capitalization companies, its performance may be more volatile than that
of a fund that invests primarily in larger companies.
Stocks of smaller companies are more risky than those of larger companies. Many
of these companies are young and have a limited track record. Because their
businesses frequently rely on narrow product lines and niche markets, they can
suffer severely from isolated business setbacks.
The fund's investment strategy will influence performance significantly.
Small-capitalization stocks could fall out of favor, causing the fund to
underperform funds that focus on other types of stocks. Also, value stocks as a
group could fall out of favor with the market, causing the fund to underperform
funds that focus on growth stocks. Similarly, if industries or individual
securities do not perform as the investment team expects, the fund could
underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, small-capitalization stocks, derivatives and other
higher-risk securities could become harder to value or to sell at a fair
price.
o Certain derivatives could produce disproportionate losses.
o Foreign investments carry additional risks, including potentially
unfavorable currency exchange rates, inadequate or inaccurate financial
information and social or political upheavals.
o The credit rating of any bonds held by the fund could be downgraded, or
the issuer could default. Bond prices generally fall when interest rates
rise. Junk bond prices can fall on bad news about the economy, an industry
or a company.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
================================================================================
YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
- --------------------------------------------------------------------------------
Annual operating expenses
- --------------------------------------------------------------------------------
Management fee 0.70%
Other expenses 0.76%
Total fund operating expenses 1.46%
Expense reimbursement (at least until 7/1/00) 0.66%
Net annual operating expenses 0.80%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
$82 $397 $735 $1,690
FUND CODES
- --------------------------------
Ticker JHFVX
CUSIP 410132500
Newspaper SmCpVal
JH fund number 437
11
<PAGE>
Small Capitalization Growth Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund normally invests at least 80% of assets in stocks of small-capitalization
companies -- companies in the capitalization range of the Russell 2000 Growth
Index. On June 1, 1999, that range was $8.7 million to $10.3 billion.
In choosing individual securities, the managers use fundamental financial
analysis to identify rapidly growing companies. The managers favor companies
that dominate their market niches or are poised to become market leaders. They
look for strong senior management teams and coherent business strategies. They
generally maintain personal contact with the senior management of the companies
the fund invests in. In managing the portfolio, the managers emphasize
diversification by sector and company.
The fund may also invest in other types of companies and certain other types of
equity securities such as preferred stock. The fund may not invest more than 5%
of assets in any one security. The fund may invest up to 10% of assets in
foreign securites.
The fund may make limited use of certain derivatives (investments whose value is
based on indices or currencies).
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in U.S. government
securities with maturities of up to three years, and may invest more than 10% of
assets in cash or cash equivalents. In these and other cases, the fund might not
achieve its goal.
================================================================================
PORTFOLIO MANAGERS
Bernice S. Behar, CFA
- ----------------------------------
Senior vice president of adviser
Joined team in 1996
Joined adviser in 1991
Began career in 1986
Laura J. Allen, CFA
- ----------------------------------
Senior vice president of adviser
Joined team in 1998
Joined adviser in 1998
Began career in 1981
Anurag Pandit, CFA
- ----------------------------------
Vice president of adviser
Joined team in 1996
Joined adviser in 1996
Began career in 1984
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. All figures assume dividend reinvestment. Past performance
does not indicate future results.
- --------------------------------------------------------------------------------
Year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1997 1998
14.86% 16.54%
1999 total return as of March 31: 3.76%
Best quarter: Q4 '98, 36.40% Worst quarter: Q3 '98, -21.25%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Fund Index
1 year 16.54% 1.23%
Life of fund - began 5/2/96 16.98% 4.01%
Index: Russell 2000 Growth Index, an unmanaged index containing those stocks
from the Russell 2000 Index with a greater-than-average growth orientation.
12
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to
movements in the stock market. Because the fund concentrates on smaller
companies, its performance may be more volatile than that of a fund that invests
primarily in larger companies.
Stocks of smaller companies are more risky than those of larger companies. Many
of these companies are young and have a limited track record. Because their
businesses frequently rely on narrow product lines and niche markets, they can
suffer severely from isolated business setbacks.
The fund's investment strategy will influence performance significantly.
Small-company stocks could fall out of favor, causing the fund to underperform
funds that focus on other types of stocks. Also, growth stocks as a group could
fall out of favor with the market, causing the fund to underperform funds that
focus on value stocks. Similarly, if the individual securities do not perform as
the team expects, the fund could underperform its peers or lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o In a down market, small-capitalization stocks, derivatives and other
higher-risk securities could become harder to value or to sell at a fair
price.
o Certain derivatives could produce disproportionate losses.
o Foreign investments carry additional risks, including potentially
unfavorable currency exchange rates, inadequate or inaccurate financial
information and social or political upheavals.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
================================================================================
YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
- --------------------------------------------------------------------------------
Annual operating expenses
- --------------------------------------------------------------------------------
Management fee 0.80%
Other expenses 3.32%
Total fund operating expenses 4.12%
Expense reimbursement (at least until 7/1/00) 3.22%
Net annual operating expenses 0.90%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
$92 $957 $1,838 $4,108
FUND CODES
- -----------------------------
Ticker --
CUSIP 410132856
Newspaper --
JH fund number 418
13
<PAGE>
International Equity Fund
GOAL AND STRATEGY
[Clip Art] The fund seeks long-term growth of capital. To pursue this goal, the
fund normally invests at least 80% of assets in a diversified portfolio of
foreign stocks from both developed and emerging countries.
The fund may invest up to 30% of assets in emerging markets as classified by
Morgan Stanley Capital International (MSCI). The fund does not maintain a fixed
allocation of assets, either with respect to securities type or geography.
In managing the portfolio, the managers concentrate on country allocation and
securities selection. They also seek to diversify the fund across countries and
sectors. The managers base the fund's country allocation on a quantitative model
as well as analysis of political trends and economic factors such as projected
currency exchange rates.
The investment analysis team is organized by sector and regularly screens large
companies, such as those listed in the MSCI All Country World-Ex U.S. Free Index
(an unmanaged global index that excludes U.S. companies). The team then uses
fundamental financial analysis to identify companies that appear most promising
in terms of stable growth, reasonable valuations and management strength. The
team gathers research from Indocam strategists and analysts in Europe and Asia
and generally conducts on-site visits.
Although the fund invests primarily in common stocks, it may invest in virtually
any type of equity security. The fund may not invest more than 5% of assets in
any one security. The fund may use certain derivatives (investments whose value
is based on indices, securities or currencies).
Under normal conditions, the fund may not invest more than 10% of assets in cash
or cash equivalents.
In abnormal conditions, the fund may temporarily invest in U.S. government
securities with maturities of up to three years and may invest more than 10% of
assets in cash or cash equivalents. In these and other cases, the fund might not
achieve its goal.
================================================================================
SUBADVISERS
Indocam International
Investment Services
- ---------------------------------
Paris-based team responsible for
day-to-day investments
Supervised by the adviser
John Hancock Advisers
International Limited
- ---------------------------------
London-based affiliate of adviser
Founded in 1986
PAST PERFORMANCE
[Clip Art] The graph shows how the fund's total return has varied from year to
year, while the table shows performance over time (along with a broad-based
market index for reference). This information may help provide an indication of
the fund's risks. All figures assume dividend reinvestment. Past performance
does not indicate future results.
- --------------------------------------------------------------------------------
Year-by-year total returns -- calendar years
- --------------------------------------------------------------------------------
1996 1997 1998
8.49% -7.34% 18.77%
1999 total return as of March 31: -0.38%
Best quarter: Q4 '98, 21.93% Worst quarter: Q3 '98, -17.16%
- --------------------------------------------------------------------------------
Average annual total returns -- for periods ending 12/31/98
- --------------------------------------------------------------------------------
Fund Index
1 year 18.77% 14.46%
Life of fund - began 3/30/95 6.63% 9.01%
Index: MSCI All Country World-Ex U.S. Free Index, an unmanaged index of freely
traded stocks of foreign companies.
14
<PAGE>
MAIN RISKS
[Clip Art] The value of your investment will go up and down in response to
movements in the stock market.
Foreign investments are more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
These risks are more significant in emerging markets.
The fund's investment strategy will influence performance significantly. If the
fund invests in countries or regions that experience economic downturns,
performance could suffer. Similarly, if the individual securities or industries
do not perform as the team expects, the fund could underperform its peers or
lose money.
To the extent that the fund makes investments with additional risks, those risks
could increase volatility or reduce performance:
o Emerging market securities, derivatives and other higher-risk securities
can be hard to value or to sell at a fair price.
o Certain derivatives could produce disproportionate losses.
The fund may trade securities actively, which could increase its transaction
costs, thus lowering performance.
================================================================================
YOUR EXPENSES
[Clip Art] Operating expenses are paid from the fund's assets, and therefore are
paid by shareholders indirectly.
- --------------------------------------------------------------------------------
Annual operating expenses
- --------------------------------------------------------------------------------
Management fee 0.90%
Other expenses 1.83%
Total fund operating expenses 2.73%
Expense reimbursement (at least until 7/1/00) 1.73%
Net annual operating expenses 1.00%
The hypothetical example below shows what your expenses would be if you invested
$10,000 over the time frames indicated, assuming you reinvested all
distributions, that the average annual return was 5% and that your shares were
redeemed at the end of the time frames. The example is for comparison only, and
does not represent the fund's actual expenses and returns, either past or
future.
- --------------------------------------------------------------------------------
Expenses Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
$102 $683 $1,290 $2,934
FUND CODES
- ------------------------------
Ticker JHIEX
CUSIP 410132609
Newspaper IntlEq
JH fund number 448
15
<PAGE>
Your account
- --------------------------------------------------------------------------------
WHO CAN BUY SHARES
John Hancock institutional funds are offered without any sales charge to certain
types of investors, as noted below:
o Retirement and other benefit plans not affiliated with the adviser.
o Certain trusts, endowment funds and foundations.
o Banks and insurance companies buying shares for their own account.
o Investment companies not affiliated with the adviser.
o Any entity that is considered a corporation for tax purposes.
o Any state, county or city, or its instrumentality, department,
authority or agency.
o Retirement plans of the adviser and its affiliates, including the
adviser's affiliated brokers.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
1 Read this prospectus carefully.
2 Determine if you are eligible, referring to "Who can buy shares" on the
left.
3 Determine how much you want to invest. The minimum initial investment is
$250,000, unless you invest an aggregate of at least $1 million in any of
the institutional funds. There is no minimum investment for plans with at
least 350 eligible employees.
4 Complete the appropriate parts of the account application, carefully
following the instructions. You must submit additional documentation when
opening trust, corporate or power of attorney accounts. If you have
questions or need more information, please contact Signature Services at
1-800-755-4371.
5 Complete the appropriate parts of the account privileges application. By
applying for privileges now, you can avoid the delay and inconvenience of
having to file an additional application if you want to add privileges
later.
6 Make your initial investment using the table on the next page.
16 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
Buying shares
- --------------------------------------------------------------------------------
Opening an account Adding to an account
By check
[Clip Art] o Make out a check for the o Make out a check for the
investment amount, payable investment amount payable
to "John Hancock Signature to "John Hancock Signature
Services, Inc." Services, Inc."
o Mail your check and o Fill out the detachable
completed application to investment slip from an
Signature Services (address account statement. If no
below). slip is available, include
a note specifying the fund
name(s), your account
number and the name(s) in
which the account is
registered.
o Mail your check and
investment slip or note to
Signature Services (address
below).
By exchange
[Clip Art] o Call Signature Services to o Call Signature Services to
request an exchange. You request an exchange. You
may only exchange for may only exchange for
shares of other shares of other
institutional funds. institutional funds.
By wire
[Clip Art] o Mail your completed o Instruct your bank to wire
application to Signature the amount of your
Services. investment to:
First Signature Bank & Trust
o Obtain your account number Account # 900022260
by calling Signature Routing # 211475000
Services.
Specify the fund name(s), your
o Instruct your bank to wire account number and the name(s)
the amount of your in which the account is
investment to: registered. Your bank may
First Signature Bank & Trust charge a fee to wire funds.
Account # 900022260
Routing # 211475000
Specify the fund name(s), the
new account number and the
name(s) in which the account
is registered. Your bank may
charge a fee to wire funds.
By phone
[Clip Art] See "By wire" and "By exchange." o Verify that your bank or
credit union is a member of
the Automated Clearing
House (ACH) system.
o Complete the "Invest By
Phone" and "Bank
Information" sections on
your account application.
o Call Signature Services to
verify that these features
are in place on your
account.
o Tell the Signature Services
representative the fund
name(s), your account
number, the name(s) in
which the account is
registered and the amount
of your investment.
- ----------------------------------------
Address:
John Hancock Signature Services, Inc.
101 Huntington Avenue
Attn: Participant Service Center
5th Floor
Boston, MA 02199
Phone Number: 1-800-755-4371
- ----------------------------------------
YOUR ACCOUNT 17
<PAGE>
- --------------------------------------------------------------------------------
Selling shares
- --------------------------------------------------------------------------------
Designed for To sell some or all of your shares
By letter
[Clip Art] o Sales of any amount; o Write a letter of
however, sales of $5 instruction indicating the
million or more must be fund name, your account
made by letter. number, the name(s) in
which the account is
registered and the dollar
value or number of shares
you wish to sell.
o Include all signatures and
any additional documents
that may be required (see
next page).
o Mail the materials to
Signature Services.
o A check will be mailed to
the name(s) and address in
which the account is
registered, or otherwise
according to your letter of
instruction.
By phone
[Clip Art] o Sales of up to $5 million. o For automated service 24
hours a day using your
touch-tone phone, call the
EASI-Line at
1-800-597-1897.
o To place your request with
a representative at John
Hancock Funds, call
Signature Services between
8 A.M. and 4 P.M. Eastern
Time on most business days.
o Redemption proceeds of up
to $100,000 may be sent by
wire or by check. A check
will be mailed to the exact
name(s) and address on the
account. Redemption
proceeds exceeding $100,000
must be wired to your
designated bank account.
By wire or electronic funds transfer (EFT)
[Clip Art] o Requests by letter to sell o To verify that the
any amount. telephone redemption
privilege is in place on an
o Requests by phone to sell account, or to request the
up to $5 million (accounts forms to add it to an
with telephone redemption existing account, call
privileges). Signature Services.
o Amounts of $5 million or
more will be wired on the
next business day.
o Amounts up to $100,000 may
be sent by EFT or by check.
Funds from EFT transactions
are generally available by
the second business day.
Your bank may charge a fee
for this service.
By exchange
[Clip Art] o Sales of any amount. o Obtain a current prospectus
for the fund into which you
are exchanging by calling
Signature Services.
o Call Signature Services to
request an exchange. You
may only exchange for
shares of other
institutional funds.
---------------------------------------
Address:
John Hancock Signature Services, Inc.
101 Huntington Avenue
Attn: Participant Service Center
5th Floor
Boston, MA 02199
Phone Number: 1-800-755-4371
---------------------------------------
18 YOUR ACCOUNT
<PAGE>
Selling shares in writing In certain circumstances, you will need to make your
request to sell shares in writing. You may need to include additional items with
your request, as shown in the table below, unless they were previously provided
to Signature Services. You may also need to include a signature guarantee, which
protects you against fraudulent orders. You will need a signature guarantee if:
o your address of record has changed within the past 30 days
o you are selling more than $100,000 worth of shares and are requesting payment
by check
o you are selling more than $5 million worth of shares
You will need to obtain your signature guarantee from a member of the Signature
Guarantee Medallion Program. Most brokers and securities dealers are members of
this program. A notary public CANNOT provide a signature guarantee.
- --------------------------------------------------------------------------------
Seller Requirements for written requests
- --------------------------------------------------------------------------------
[Clip Art]
Owners of corporate or association o Letter of instruction.
accounts.
o Corporate resolution,
certified within the past
12 months, or a
business/organization
certification form.
o On the letter and the
resolution, the signature
of the person(s) authorized
to sign for the account.
o Signature guarantee if
applicable (see above).
Retirement plan or pension trust o Letter of instruction.
accounts.
o On the letter, the
signature(s) of the
trustee(s).
o Copy of the trust document
certified within the past
12 months or a trust
certification form.
o Signature guarantee if
applicable (see above).
Account types not listed above. o Call 1-800-755-4371 for
instructions.
YOUR ACCOUNT 19
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION POLICIES
Valuation of shares The net asset value per share (NAV) for each fund is
determined each business day at the close of regular trading on the New York
Stock Exchange (typically 4 P.M. Eastern Time). The funds use market prices in
valuing portfolio securities, but may use fair-value estimates if reliable
market prices are unavailable. The fund may also value securities at fair value
if the value of these securities has been materially affected by events
occurring after the close of a foreign market. The funds may trade foreign stock
or other portfolio securities on U.S. holidays and weekends, even though the
funds' shares will not be priced on those days. This may change a fund's NAV on
days when you cannot buy or sell shares.
Buy and sell prices When you buy shares, you pay the NAV. When you sell shares,
you receive the NAV.
Execution of requests Each fund is open on those days when the New York Stock
Exchange is open, typically Monday through Friday. Buy and sell requests are
executed at the next NAV to be calculated after Signature Services receives your
request in good order.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider using EASI-Line or sending your request in writing.
In unusual circumstances, any fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business days
or longer, as allowed by federal securities laws.
Telephone transactions For your protection, telephone requests may be recorded
in order to verify their accuracy. Also for your protection, telephone
transactions are not permitted on accounts whose names or addresses have changed
within the past 30 days. Proceeds from telephone transactions can only be mailed
to the address of record.
Exchanges You may exchange shares of one institutional fund for shares of any
other institutional fund. The registration for both accounts involved must be
identical.
To protect the interests of other investors in the fund, a fund may cancel the
exchange privileges of any parties that, in the opinion of the fund, are using
market timing strategies or making more than seven exchanges per owner or
controlling party per calendar year. The funds reserve the right to require that
previously exchanged shares and reinvested dividends be in a fund for 90 days
before a shareholder is permitted a new exchange. A fund may also refuse any
exchange order. A fund may change or cancel its exchange policies at any time,
upon 60 days' notice to its shareholders.
Certificated shares Most shares are electronically recorded. If you wish to have
certificates for your shares, please write to Signature Services. Certificated
shares can only be sold by returning the certificates to Signature Services,
along with a letter of instruction or a stock power and a signature guarantee.
Sales in advance of purchase payments When you place a request to sell shares
for which the purchase money has not yet been collected, the request will be
executed in a timely fashion, but the fund will not release the proceeds to you
until your purchase payment clears. This may take up to ten business days after
the purchase.
- --------------------------------------------------------------------------------
DIVIDENDS AND ACCOUNT POLICIES
Account statements In general, you will receive account statements as follows:
o after every transaction (except a dividend reinvestment) that affects your
account balance
o after any changes of name or address of the registered owner(s)
o in all other circumstances, every month
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
Dividends Active Bond Fund declares income dividends daily and pays them
monthly. Your income dividends begin accruing the day after payment is received
by the fund and continue through the day your shares are actually sold. Dividend
Performers Fund declares and pays any income dividends quarterly. All other
funds declare and pay any income dividends annually. Capital gains, if any, are
typically distributed annually.
Dividend reinvestments Dividends will be reinvested automatically in additional
shares of the same fund on the dividend record date. Alternatively, you can
choose to have a check for your dividends mailed to you. However, if the check
is not deliverable, your dividends will be reinvested.
20 YOUR ACCOUNT
<PAGE>
Taxability of dividends For investors who are not exempt from federal income
taxes, dividends you receive from a fund, whether reinvested or taken as cash,
are generally considered taxable. Dividends from a fund's short-term capital
gains are taxable as ordinary income. Dividends from a fund's long-term capital
gains are taxable at a lower rate. Whether gains are short-term or long-term
depends on the fund's holding period. Some dividends paid in January may be
taxable as if they had been paid the previous December.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
Taxability of transactions Any time you sell or exchange shares, it is
considered a taxable event for you if you are not exempt from federal income
taxes. Depending on the purchase price and the sale price of the shares you sell
or exchange, you may have a gain or a loss on the transaction. You are
responsible for any tax liabilities generated by your transactions.
Year 2000 compliance The adviser and the funds' service providers are taking
steps to address any year 2000-related computer problems. However, there is some
risk that these problems could disrupt the issuers in which the funds invest,
the funds' operations or financial markets generally.
Special investment privilege If you sell your shares as a result of withdrawing
from your retirement plan, you will not be able to withdraw the proceeds and
reinvest them in fund shares. However, you can reinvest in Class A shares of any
John Hancock fund without paying a front-end sales charge. This privilege is
available whether you reinvest into a taxable account or roll the proceeds into
an IRA. If you reinvest in a taxable account, you may be subject to 20% tax
withholding on the amount of your distribution.
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
The funds' board of trustees oversees each fund's business activities and
retains the services of the various firms that carry out the fund's operations.
The trustees have the power to change the funds' respective investment goals
without shareholder approval.
The investment adviser John Hancock Advisers, Inc., 101 Huntington Avenue,
Boston, MA 02199-7603.
The subadvisers for the International Equity Fund Indocam International
Investment Services, 90 Boulevard Pasteur, Paris, France 75015. John Hancock
Advisers International Limited, 32-36 Duke Street, St. James SWIY6DF, London,
U.K.
Management fees The management fees paid to the investment adviser by the John
Hancock institutional funds last fiscal year are as follows:
- --------------------------------------------------------------------------------
Fund % of net assets
- --------------------------------------------------------------------------------
Active Bond 0.00%
Dividend Performers 0.35%
Medium Capitalization Growth 0.59%
Small Capitalization Value 0.04%
Small Capitalization Growth 0.00%
International Equity 0.00%
YOUR ACCOUNT 21
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
These tables detail the performance of each fund's share, including total return
information showing how much an investment in the fund has increased or
decreased each year.
Active Bond Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $8.64 $8.54 $8.83
Net investment income (loss)(2) 0.51 0.60 0.59 0.56
Net realized and unrealized gain (loss) on investments 0.16 (0.09) 0.34 (0.02)
Total from investment operations 0.67 0.51 0.93 0.54
Less distributions:
Dividends from net investment income (0.51) (0.60) (0.59) (0.56)
Distributions in excess of net investment income -- -- (0.00)(3) (0.00)(3)
Distributions from net realized gain on investments sold (0.02) (0.01) (0.05) (0.22)
Total distributions (0.53) (0.61) (0.64) (0.78)
Net asset value, end of period $8.64 $8.54 $8.83 $8.59
Total investment return at net asset value(4) (%) 7.76(5) 6.17 11.25 6.24
Total adjusted investment return at net asset value(4,6) (%) (0.46)(5) 2.72 9.21 4.51
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 1,171 2,191 5,158 5,686
Ratio of expenses to average net assets (%) 0.65(7) 0.60 0.60 0.60
Ratio of adjusted expenses to average net assets(8,9) (%) 9.60(7) 4.05 2.64 2.33
Ratio of net investment income (loss) to average net assets (%) 6.53(7) 7.10 6.78 6.36
Ratio of adjusted net investment income (loss) to average net assets(8,9) (%) (2.42)(7) 3.65 4.74 4.63
Portfolio turnover rate (%) 71 136 230 356
Fee reduction per share(2) ($) 0.75 0.30 0.18 0.15
</TABLE>
(1) Began operations on March 30, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Total investment return assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
22 FINANCIAL HIGHLIGHTS
<PAGE>
Dividend Performers Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $10.15 $11.91 $14.92
Net investment income (loss)(2) 0.23 0.21 0.18 0.15
Net realized and unrealized gain (loss) on investments 1.68 1.92 3.92 1.04
Total from investment operations 1.91 2.13 4.10 1.19
Less distributions:
Dividends from net investment income (0.19) (0.18) (0.17) (0.15)
Distributions from net realized gain on investments sold (0.07) (0.19) (0.92) (1.50)
Total distributions (0.26) (0.37) (1.09) (1.65)
Net asset value, end of period $10.15 $11.91 $14.92 $14.46
Total investment return at net asset value(3) (%) 22.79(4) 21.26 35.55 7.97
Total adjusted investment return at net asset value(3,5) (%) 19.79(4) 20.07 35.23 7.72
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 3,319 8,668 20,884 17,743
Ratio of expenses to average net assets (%) 0.75(6) 0.70 0.70 0.70
Ratio of adjusted expenses to average net assets(7,8) (%) 4.02(6) 1.89 1.02 0.95
Ratio of net investment income (loss) to average net assets (%) 2.51(6) 1.94 1.31 0.95
Ratio of adjusted net investment income (loss) to average net assets(7,8) (%) (0.76)(6) 0.75 0.99 0.70
Portfolio turnover rate (%) 70 37 77 64
Fee reduction per share(2) ($) 0.30 0.13 0.04 0.04
</TABLE>
(1) Began operations on March 30, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Total investment return assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
FINANCIAL HIGHLIGHTS 23
<PAGE>
Medium Capitalization Growth Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $10.69 $12.67 $13.51
Net investment income (loss)(2) (0.01) 0.01 0.00(3) (0.02)
Net realized and unrealized gain (loss) on investments and foreign currency transactions 2.22 2.02 2.06 (0.68)
Total from investment operations 2.21 2.03 2.06 (0.70)
Less distributions:
Dividends from net investment income (0.02) -- (0.00)(3) --
Distributions from net realized gain on investments sold -- (0.05) (1.22) (1.72)
Distributions in excess of net realized gain on investments sold -- -- -- (0.10)
Total distributions (0.02) (0.05) (1.22) (1.82)
Net asset value, end of period $10.69 $12.67 $13.51 $10.99
Total investment return at net asset value(4) (%) 25.98(5) 19.00 17.39 (5.34)
Total adjusted investment return at net asset value(4,6) (%) 23.70(5) 18.48 17.19 (5.55)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 8,399 29,085 40,302 16,687
Ratio of expenses to average net assets (%) 0.93(7) 0.90 0.90 0.90
Ratio of adjusted expenses to average net assets(8,9) (%) 3.51(7) 1.42 1.10 1.11
Ratio of net investment income (loss) to average net assets (%) (0.10)(7) 0.06 0.03 (0.13)
Ratio of adjusted net investment income (loss) to average net assets(8,9) (%) (2.68)(7) (0.46) (0.17) (0.34)
Portfolio turnover rate (%) 189 281 341 116
Fee reduction per share(2) ($) 0.23 0.06 0.03 0.03
</TABLE>
(1) Began operations on April 11, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Total investment return assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
24 FINANCIAL HIGHLIGHTS
<PAGE>
Small Capitalization Value Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.09 $9.38 $11.74
Net investment income (loss)(2) 0.17 0.14 0.07 0.05
Net realized and unrealized gain (loss) on investments 0.56 1.08 3.65 (1.23)
Total from investment operations 0.73 1.22 3.72 (1.18)
Less distributions:
Dividends from net investment income (0.14) (0.12) (0.10) (0.04)
Distributions from net realized gain on investments sold -- (0.81) (1.26) (1.20)
Distributions in excess of net realized gain on investments sold -- -- -- (0.16)
Total distributions (0.14) (0.93) (1.36) (1.40)
Net asset value, end of period $9.09 $9.38 $11.74 $9.16
Total investment return at net asset value(3) (%) 8.61(4) 13.78 41.81 (9.46)
Total adjusted investment return at net asset value(3,5) (%) 5.40(4) 12.75 41.19 (10.12)
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 5,293 6,011 9,549 7,418
Ratio of expenses to average net assets (%) 0.83(6) 0.80 0.80 0.80
Ratio adjusted expenses to average net assets(7,8) (%) 4.55(6) 1.83 1.42 1.46
Ratio of net investment income (loss) to average net assets (%) 2.04(6) 1.46 0.62 0.45
Ratio of adjusted net investment income (loss) to average net assets(7,8) (%) (1.68)(6) 0.43 -- (0.21)
Portfolio turnover rate (%) -- 96 216 126
Fee reduction per share(2) ($) 0.30 0.10 0.07 0.07
</TABLE>
(1) Began operations on April 19, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Total investment return assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
FINANCIAL HIGHLIGHTS 25
<PAGE>
Small Capitalization Growth Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/97(1) 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.24 $11.74
Net investment income (loss)(2) 0.03 (0.03) (0.07)
Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.73 2.53 0.61
Total from investment operations 0.76 2.50 0.54
Less distributions:
Dividends from net investment income (0.02) (0.00)(3) --
Distributions from net realized gain on investments sold -- -- (0.63)
Total distributions (0.02) (0.00)(3) (0.63)
Net asset value, end of period $9.24 $11.74 $11.65
Total investment return at net asset value(4) (%) 8.89(5) 27.07 4.67
Total adjusted investment return at net asset value(4,6) (%) (3.84)(5) 23.92 1.45
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 999 3,102 2,453
Ratio of expenses to average net assets (%) 0.90(7) 0.90 0.90
Ratio of adjusted expenses to average net assets(8,9) (%) 16.24(7) 4.05 4.12
Ratio of net investment income (loss) to average net assets (%) 0.35(7) (0.25) (0.60)
Ratio of adjusted net investment income (loss) to average net assets(8,9) (%) (14.99)(7) (3.40) (3.82)
Portfolio turnover rate (%) 92 117 125
Fee reduction per share(2) ($) 1.22 0.34 0.35
</TABLE>
(1) Began operations on May 2, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Total investment return assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
26 FINANCIAL HIGHLIGHTS
<PAGE>
International Equity Fund
Figures audited by Deloitte & Touche LLP.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended: 2/96(1) 2/97 2/98 2/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $8.50 $9.24 $9.35 $9.63
Net investment income (loss)(2) 0.15 0.12 0.06 0.07
Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.68 0.14 0.23 0.59
Total from investment operations 0.83 0.26 0.29 0.66
Less distributions:
Dividends from net investment income (0.08) (0.10) (0.01) (0.07)
Distributions in excess of net investment income -- -- -- (0.04)
Distributions from net realized gain on investments sold (0.01) (0.05) -- --
Total distributions (0.09) (0.15) (0.01) (0.11)
Net asset value, end of period $9.24 $9.35 $9.63 $10.18
Total investment return at net asset value(3) (%) 9.81(4) 2.79 3.07 6.88
Total adjusted investment return at net asset value(3,5) (%) 3.26(4) 0.47 2.05 5.15
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 2,897 4,204 7,983 7,805
Ratio of expenses to average net assets (%) 1.05(6) 1.00 1.00 1.00
Ratio of adjusted expenses to average net assets(7,8) (%) 8.19(6) 3.32 2.02 2.73
Ratio of net investment income (loss) to average net assets (%) 1.75(6) 1.26 0.60 0.69
Ratio of adjusted net investment income (loss) to average net assets(7,8) (%) (5.39)(6) (1.06) (0.42) (1.04)
Portfolio turnover rate (%) 59 68 125 83
Fee reduction per share(2) ($) 0.60 0.22 0.10 0.17
</TABLE>
(1) Began operations on March 30, 1995.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Total investment return assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Adjusted expenses as a percentage of average net assets are expected to
decrease and adjusted net income as a percentage of average net assets is
expected to increase as the net assets of the fund grow.
FINANCIAL HIGHLIGHTS 27
<PAGE>
- --------------------------------------------------------------------------------
For more information
- --------------------------------------------------------------------------------
Two documents are available that offer further information on John Hancock
institutional funds:
ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, a discussion of the market conditions and
investment strategies that significantly affected performance, as well as the
auditor's report (in annual report only).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference into (is legally a part of) this prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact John Hancock:
By mail:
John Hancock Signature
Services, Inc.
101 Huntington Avenue
Attn: Participant Service Center
5th Floor
Boston, MA 02199
By phone: 1-800-755-4371
By EASI-Line: 1-800-597-1897
By TDD: 1-800-462-0825
On the Internet: www.jhfunds.com
Or you may view or obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC. For access to
the Reference Room call 1-800-SEC-0330
By mail: Public Reference Section Securities and Exchange Commission Washington,
DC 20549-6009 (duplicating fee required)
On the Internet: www.sec.gov
SEC file number: 811-8852
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
101 Huntington Avenue
Boston, Massachusetts
02199-7603
(C) 2000 John Hancock Funds, Inc.
KB0PN 1/00
John Hancock(R)
